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Ford CEO does little to discourage death-of-Mercury reports

May 28, 2010 | 10:27
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In a meeting with industry analysts Friday, Ford Motor Co. Chief Executive Alan Mulally declined to confirm reports that the automaker is about to kill its Mercury brand, but he also didn't go out of his way to deny the expected strategic move.

"We have shared in the past that we continue to look at our portfolio of brands and specific nameplates themselves, but we have nothing new to add to that," Mulally said.

Earlier in the meeting he talked about the automaker's "laser-like focus on the Ford brand."

And Mulally, a former Boeing Co. executive credited with guiding Ford through the recession without having to join rivals General Motors Corp. and Chrysler Group in a bankruptcy reorganization, also talked about Ford's strategy of simplifying its operations by focusing on fewer brands and by developing vehicle platforms that can be used worldwide.

He noted that the new Ford Fiesta, which goes on sale in the U.S. this summer, shares about 65% of its parts with the models of the Fiesta sold in Europe and China. The upcoming new-generation Focus that goes on sale here next year will share as much as 85% of its content with similar versions of the compact car sold in other regions of the world.

Such a strategy allows Ford to spread design and development expenses across a great number of vehicles sold, Mulally said. As a standalone American-designed and -built vehicle, the Focus would have sold about 150,000 units annually, he said. But as a global vehicle, Ford spreads it development expense across sales that will approach 2 million. And the automaker also derives economies of scale and other efficiencies by having the various regional versions share the same platform and other components, he said.

Analysts say that dropping the struggling Mercury brand is part of a move to focus the automaker's design and sales efforts on its Ford and Lincoln lines. Ford officials have previously said they planned to push Lincoln over Mercury in design and development decisions.

Mulally "has shown little mercy when forced to make decisions that set the company up for long-term growth. Closing this historic brand, while bittersweet, is yet another tough, but good decision," said James Bell, an analyst with Kelley Blue Book, the auto pricing information company.

A move to shutter the Mercury brand would follow previous moves in recent years to shrink the number of brands Ford produces. In March, the company sold its Swedish Volvo division to Zhejiang Geely Holding Co. of China. Previously it shed the Jaguar, Land Rover and Aston Martin nameplates.

Killing off brands has been part of the formula GM has used to revive its business over the last year, shutting down its Pontiac, Saturn and Hummer divisions and selling off the Saab line.

Mercury is down to just four vehicles, the midsize Milan sedan, the Mariner and Mountaineer SUVs and the giant Grand Marquis sedan. Production of the Grand Marquis will end when Ford closes the Canadian factory where the car is built next year. And while Ford has said it plans to build a new generation Ford Explorer, it has been silent on any plans for the Mountaineer, the SUV's Mercury-branded sibling.

Mercury was established in 1939 by Edsel Ford, son of founder Henry Ford, to fill what he considered a void between the automaker's mass-market Ford brand and the upscale Lincoln line. Sales peaked in 1978 at 579,498, but have fallen precipitously since then. Mercury sold only 92,299 vehicles last year. By comparison, the Ford brand sold about 1.4 million vehicles last year.